Sudan

Country Name: Republic of Sudan
Currency: Sudanese Pound (SDG)
Primary Tax Authority: Taxation Chamber (Sudan Ministry of Finance and Economic Planning)
Key Legislation:

Income Tax Act
Value Added Tax (VAT) Act
Customs and Excise Act
Investment Promotion Act
Tax Procedures Law

Fiscal Authority Allocation

Centralized Fiscal System:
Sudan operates a centralized tax system. The Sudanese Taxation Chamber under the Ministry of Finance and Economic Planning administers and collects taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties.

Corporate Income Tax (CIT)

Standard Rate: 30%
Sudan imposes a corporate income tax rate of 30% on resident companies. For companies operating in the oil and gas sector, a higher tax rate of 35% applies.

Corporate Forms and Taxation:

Resident Companies: Taxed on worldwide income.
Non-Resident Companies: Taxed only on Sudan-sourced income.

Exemptions and Incentives:

Investment Incentives: The Investment Promotion Act offers CIT reductions, customs duty exemptions, and VAT relief for companies investing in priority sectors such as agriculture, energy, infrastructure, and mining.
Free Zones: Companies operating in Sudan’s free zones are exempt from CIT, customs duties, and VAT on imported goods and capital equipment for the first five to 10 years.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 17%
Sudan imposes VAT at a standard rate of 17% on most goods and services. VAT is applied to both domestic production and imports.

Exemptions:
Certain goods and services, including basic food products, healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, allowing businesses to claim refunds on VAT paid on inputs used to produce export goods.

Personal Income Tax (PIT)

Progressive Rates:
Sudan applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Sudan-sourced income.

Resident Tax Rates for 2023 (Annual Income):

Up to SDG 6,000: 0%
SDG 6,001 to SDG 12,000: 10%
Above SDG 12,000: 15%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 10% on Sudan-sourced income.

Deductions and Allowances:
Deductions are available for pension contributions, social security, and personal allowances, such as medical expenses and charitable donations.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Sudan’s social security system, which covers pensions, healthcare, and other social benefits.

Employer Contribution: 17% of gross salary.
Employee Contribution: 8% of gross salary.

Withholding Taxes

Dividends: 5% for residents, 15% for non-residents
Interest: 15%
Royalties: 15%
Sudan imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under double taxation agreements (DTAs).

Transfer Pricing Rules

Sudan applies the arm’s-length principle for transactions between related parties. Companies must ensure that cross-border transactions between related entities are conducted at market value. Transfer pricing documentation is required for large multinational companies.

Special Tax Regimes

Free Zones: Companies operating in Sudan’s free zones are eligible for CIT holidays, customs duty exemptions, and VAT exemptions on imported goods for up to 10 years. These zones aim to promote export-oriented industries and attract foreign direct investment (FDI).
Investment Incentives: Under the Investment Promotion Act, companies investing in key sectors such as agriculture, manufacturing, energy, and infrastructure may receive CIT reductions, VAT exemptions, and customs duty relief.

Other Taxes

Customs Duties: Sudan imposes customs duties on imported goods, with rates ranging from 5% to 40%, depending on the type of goods. Essential goods and raw materials may benefit from reduced or zero customs duties.
Excise Taxes: Excise taxes are levied on goods such as alcohol, tobacco, fuel, and luxury items.
Property Tax: Local authorities impose property taxes on land and buildings based on their market value.

Double Taxation Agreements (DTAs)

Sudan has signed several double taxation agreements (DTAs) with countries including Egypt, Malaysia, and Turkey. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Sudan and other jurisdictions.

Local Taxes

Local governments in Sudan may impose minor taxes such as property taxes, business license fees, and local service charges. However, most major taxes, including CIT, PIT, and VAT, are centrally administered by the Sudanese Taxation Chamber.

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within four months following the end of the financial year. Personal income tax returns are due by March 31st. VAT returns are filed quarterly, depending on the size of the business.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The Taxation Chamber imposes interest at 1.5% per month on overdue taxes, with additional penalties for underreporting or tax evasion.

Recent Developments

Oil and Gas Sector Investment:
Sudan remains heavily reliant on its oil and gas sector. The government is offering tax incentives to attract further investment, including CIT holidays, VAT exemptions, and customs duty reductions on imported equipment for oil and gas exploration and production.

Renewable Energy Focus:
Sudan is encouraging investment in renewable energy projects, particularly solar and wind energy. Companies investing in these sectors benefit from tax incentives such as CIT reductions and VAT exemptions.

Digital Taxation:
Sudan is in the process of modernizing its tax administration, including efforts to tax digital platforms and e-commerce. The government is implementing digital tax systems to improve compliance and increase transparency in tax collection.

Subscribe to my free newsletter for regular updates on law, taxation and business worldwide.